Over the past 10 years, I have seen a major shift in how enterprises and government services view software. It is no longer merely a means of increasing efficiency, but has become the basis of many businesses and a source of future profit through the expanding digital services sector. The advent of the Internet of Things (IoT) means manufacturers in every industry must deploy software that integrates and streamlines product design, processes and the supply chain. They need software that prioritises customer orders, delivery schedules, post-sales services and reliability. It must predict maintenance issues, analyse product use, improve safety and assess the impact of external events.

The line between competitors, partners and collaborators is blurring as digital disruption hijacks traditional business models

As technology continues to develop, the role of software will broaden and it will become even more essential to daily life. The changes facing the software sector are immense; advanced networks and 5G will create huge new possibilities for the IoT. The way robotics will be influenced by human labour, and mobility by artificial intelligence, will also be defined by software developments. Additionally, the importance of cybersecurity to our personal, professional and public lives is set to become an even larger issue as big data becomes more sophisticated. Smart cities and energy infrastructure will also see transformational change, particularly in relation to tackling climate change.

All together
The line between competitors, partners and collaborators is blurring as digital disruption hijacks traditional business models. The breadth of change that companies will have to make if they are to reshape their operations in the digital age will be too great to achieve alone. As a result, businesses are no longer seeing their peers simply as competitors. Cooperative business models will become the new norm; hardware companies will partner with software vendors, manufacturers will work together, and different industries will collaborate on multi-domain projects. This new, collaborative business model allows every company to become a software company, or at least think like one without risking the entire enterprise.

This is the concept behind ADAMOS, a unique software and manufacturing venture between Software AG and German manufacturing heavyweights such as Dürr, DMG Mori and Zeiss. ADAMOS has developed an IoT platform that is driving digital manufacturing processes in many German factories.

The German Government predicts that digitalising industries will open up potential additional cumulative value-added of €425bn in Germany alone. The same will be true for Europe more widely, but only if its businesses move quickly to become leaders in the Fourth Industrial Revolution. The European Commission has said of digital transformation: “Currently, EU businesses are not taking full advantage of advanced technologies or the innovative business models offered by the collaborative economy. The state of the digitalisation of industry varies across sectors, particularly between hi-tech and more traditional areas, and also between EU countries and regions. There are also large disparities between large companies and SMEs.” If Europe can ensure that its companies are able to reach their potential in the digital economy, it will step into the Fourth Industrial Revolution with confidence.

Playing to its strengths
Europe does not need to copy Silicon Valley’s digital transformation – instead, it should build its presence in fields such as collaborative software, sustainability and efficient resource use.

European countries must continue to form partnerships and innovate to grow their digital potential. Otherwise, the region will lose its reputation for industrial excellence. Never before have so many technologies converged to offer new opportunities to those who move quickly enough. If Europe can make bold moves, it will enjoy significant rewards.